The Commerce Department recently reported that fourth-quarter GDP rose at a 2.9% annualized pace, higher than the Dow Jones analysts’ estimate of 2.8%. Also, the University of Michigan’s closely watched consumer sentiment index measured 64.9 for January, up slightly from the preliminary reading of 64.6 earlier this month and 9% higher than December’s final reading.
Moreover, the Personal Consumption Expenditures price index rose by 5% in December compared to a year earlier. The Federal Reserve’s preferred inflation gauge showed prices rose at a slower pace last month, indicating further progress in the central bank’s battle with persistent inflation.
The FOMC is widely anticipated to raise the interest rate at a slower pace of 0.25% bps in the next policy meeting. However, the inflation remains above the Federal Reserve’s 2% target.
Given the rising optimism, fundamentally strong stocks Nokia Oyj (NOK), China Automotive Systems, Inc. (CAAS), Assertio Holdings, Inc. (ASRT), and Data Storage Corporation (DTST) might be solid buys in 2023. These stocks are currently trading under $8.
Nokia Oyj (NOK)
Headquartered in Espoo, Finland, NOK provides mobile, fixed, and cloud network solutions worldwide. The company operates through four segments Mobile Networks; Network Infrastructure; Cloud and Network Services; and Nokia Technologies.
On January 23, NOK announced that it had signed a new cross-license 5G patent agreement with Samsung, under which Samsung will make payments to Nokia for a multi-year period beginning 1 January 2023, following the expiry of the previous agreement at the end of 2022.
It pays an annual dividend of $0.08 that yields 1.26% on the current market price, higher than the 4-year average dividend yield of 1.20%.
NOK’s forward EV/Sales of 0.82x is 71.6% lower than the industry average of 2.87x. Its forward Price/Sales multiple of 0.95 is 67.1% lower than the industry average of 2.90.
NOK’s net sales rose 16.1% year-over-year to €7.45 billion ($8.09 billion) for the fourth quarter that ended December 31, 2022. Its gross profit grew 25.8% year-over-year to €3.19 billion ($3.46 billion). Also, its profit for the period rose 363.5% year-over-year to €3.15 billion ($3.43 billion), while its EPS came in at €0.56, representing an increase of 366.7% year-over-year.
NOK’s revenue is expected to increase 12.3% year-over-year to $6.31 billion in the first quarter ending March 2023. Its EPS is expected to grow 8.2% year-over-year to $0.08 in the same quarter. It surpassed revenue estimates in three out of four trailing quarters, which is impressive.
Over the past three months, the stock has gained 8.5% to close the last trading session at $4.73.
NOK’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
NOK has an A grade for Value and Sentiment. In the B-rated Technology – Communication/Networking industry, it is ranked #9 out of 48 stocks.
Click here for the additional POWR Ratings for Stability, Growth, Momentum, and Quality for NOK.
China Automotive Systems, Inc. (CAAS)
Headquartered in Jingzhou, the People’s Republic of China, CAAS manufactures automotive systems and components in China through its subsidiaries and sells its products to original equipment manufacturing customers (OEMs).
On December 12, CAAS announced that it had introduced a new series of Electric Power Steering systems for China’s largest EV producer, BYD Company Limited (BYDDF).
Qizhou Wu, CAAS’ CEO, said, “Working with BYD brings out the best of CAAS as our engineering team embraces every opportunity to set new records and raise the bar in new product designs.”
In terms of forward Price/Sales, CAAS is trading at 0.40x, which is 57.7% lower than the industry average of 0.96x. Its forward EV/Sales multiple of 0.33 is 73.3% lower than the industry average of 1.23.
CAAS’ net sales increased 26.8% year-over-year to $137.2 million in the third quarter of fiscal 2022, which ended September 30. The company’s gross profit increased 24.4% year-over-year to $20.90 million, and its income from operations grew 716.7% year-over-year to $4.90 million.
Furthermore, net income attributable to CAAS’ common shareholders came in at $7.5 million and $0.24 per share, compared to a net loss of $0.3 million and $0.01 per share for the previous-year quarter.
Analysts expect CAAS’ revenue to increase 8.3% year-over-year to $539.23 million in the fiscal year (ended December 2022). The company’s EPS for the same year is estimated to grow 72.2% year-over-year to $0.62. Also, the company has surpassed the consensus revenue estimates in each of the trailing four quarters.
The stock has gained 159.7% over the past nine months, closing the last trading session at $7.22.
CAAS’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall B rating translates to a Buy in our POWR Ratings system.
CAAS has an A grade for Value and Sentiment. It has a B grade for Growth. It is ranked #3 among the 45 stocks in the China group.
Beyond what is stated above, we have also rated CAAS for Momentum, Quality, and Stability. Get all CAAS ratings here.
Assertio Holdings, Inc. (ASRT)
Specialty pharmaceutical company ASRT provides medicines in neurology, hospital, and pain and inflammation. Its pharmaceutical products include INDOCIN, CAMBIA, Zipsor, SPRIX, and Otrexup.
ASRT’s forward EV/EBIT of 3.57x is 80% lower than the industry average of 17.80x. Its forward non-GAAP P/E multiple of 5.65 is 72.5% lower than the industry average of 20.50.
ASRT’s total revenue came in at $34.21 million for the third quarter that ended September 30, 2022, up 34.3% year-over-year. Its net product sales increased 31.9% year-over-year to $34.28 million. Moreover, its net income came in at $4.17 million, representing an increase of 11.7% year-over-year.
Street expects ASRT’s revenue to increase 41.8% year-over-year to $47.27 million for the to-be-reported fourth quarter ended December 2022. Its EPS is expected to grow 52.3% year-over-year to $0.15 in the same quarter.
ASRT’s shares have gained 87.4% over the past nine months to close the last trading session at $4.01.
It’s no surprise that ASRT has an overall B rating equating to a Buy in our POWR Ratings system.
It has an A grade for Value and a B for Growth and Quality. The stock is ranked #23 out of 170 stocks in the Medical – Pharmaceuticals industry.
In addition to the POWR Ratings above, we’ve also rated ASRT for Momentum, Stability, and Sentiment. Get all ASRT ratings here.
Data Storage Corporation (DTST)
DTST provides multi-cloud information technology solutions across the United States and Canada. The company offers data protection and disaster recovery solutions; high availability, data vaulting, DRaaS, IaaS, message logic, support, maintenance, and internet solutions; and cybersecurity solutions.
On November 3, 2022, DTST announced a realignment of its management and operations, which should help accelerate the growth of the company’s core business solutions. It intends to centralize the service delivery, infrastructure, and sales engineering teams.
In terms of forward EV/Sales, DTST is trading at 0.10x, which is 96.4% lower than the industry average of 2.87x, while its forward Price/Sales of 0.53x is 82.7% lower than the industry average of 3.07x.
DTST’s sales rose 14.5% year-over-year to $4.42 million for the third quarter that ended September 30, 2022. Its gross profit came in at $1.85 million, up 20.1% year-over-year. The company’s adjusted EBITDA increased 54.7% from the prior-year quarter to $162,390.
Analysts expect DTST’s revenue to increase 56.6% year-over-year to $23.30 million for fiscal year 2022.
The stock has gained 13% over the past month to close the last trading session at $1.73.
It is no surprise that DTST has an overall B rating, which equates to a Buy in our POWR Ratings system.
The stock has an A grade for Sentiment and a B for Value and Quality. It is ranked #6 in the 66-stock Internet industry.
To see the additional POWR Ratings for Momentum, Growth, and Stability for DTST, click here.
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NOK shares were trading at $4.79 per share on Monday morning, up $0.06 (+1.27%). Year-to-date, NOK has gained 3.23%, versus a 5.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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